Trusts: Easier than you think?

Protection providers often extol the benefits of placing plans in trust. The advantages for clients are widely recognised and numerous – inheritance tax mitigation, avoiding probate delay, controlling claim proceeds, and so the long, familiar list continues.

Yet, dismissed as unnecessary form-filling, or simply viewed as irrelevant in the context of a mortgage sale, less than 5% of our personal protection plans are written in trust.

Many providers are committed to making the trusts process as straightforward as possible for adviser and client alike, by simplifying trust forms wherever possible and producing easy to follow guidance literature. Nevertheless, placing a plan in trust will always involve a little more effort on the part of the adviser than not doing so.

But there is a growing trend for providers to make this process even easier with the use of online trusts. Several providers offer this in slightly different guises but this is generally in the form of a trust request rather than a formal deed. This involves the customer making a declaration to their adviser that they want their policy to be written under trust. The adviser then completes the details of any trustees and/or beneficiaries online and submits the form to the insurance company. Once complete copies will be sent to the client and their trustees and no signatures are generally required. The main drawback is that this process is only available for new applications and it must be completed before the policy starts in order for the trust to be valid. You’re also never quite sure whether the trustees have accepted their appointment and are willing to act when the time comes.

But wouldn’t it be good if online trusts could be offered for existing plans as well. Well the truth is they can, as long as an appropriate process is used. Royal London is the first provider to introduce this facility for our most frequently used trusts. Other trusts and the deeds used to amend them will follow in due course to allow you to make the most of the trusts we have available.

The process is a little more involved than a trust request and just like a paper form requires a signature from each of the client, a witness and the trustees in order for a valid deed to be created. But by using electronic signatures the time taken and effort needed to complete the form can be significantly reduced in comparison to a paper form.

As long as you have up to date email addresses and mobile numbers for each client and their trustees, the process allows all parties to sign within minutes of each other, even if they are hundreds of miles apart, and removes the risk of the form getting ‘lost in the post’. The guided process ensures that essential parts of the form cannot be left uncompleted, and the process also ensures that people cannot sign in the wrong order, both of which are common reasons for paper forms being returned for amendment. We’ll even notify you when the form is complete so that you can download a copy of the form for your own records.

This process can be used with new applications as well as policies that are already in force. So, as an adviser, you are in control and can choose when in the sales process you want to introduce the concept of using a trust. This means that for policies like Relevant life or business protection where it is essential the trust is in place before the policy starts you can do this at the same time as the online application. But for personal or family protection, whilst it may be good practice but there isn’t the same need to set the trust up immediately, it can be done at a time that suits both you and the client without disturbing the sales process.

The process is exactly the same irrespective of whether it is a new application or the policy is already in force. It also means that you can revisit any plans sold previously where the client never got round to completing the paper form and add the trust now. Perhaps you have clients coming up for an annual review where their policy wasn’t previously written in trust. This new facility allows you to do this quickly and simply.

So the next time you’re submitting a new application to Royal London or reviewing the cover one of your client’s has with Royal London why not take a look at our new online trust service. If you do, please let us know what you think of it. We are keen to get as much feedback as possible so that we can develop the service in a way that adds value to you and your customers.